The flattest seasonal holiday season has been reflected in the latest global capacity which has broadly remained around sixty million seats a week since the middle of December. The early Christmas present of breaking that sixty million, was just that, a present and this week’s 59.6 million is perhaps likely to be as good as we can expect in the next few weeks.
The first month of every year is always one of the slowest for demand with no real leisure activity aside from a slippery slope or two in Europe and no major public holidays to celebrate before Chinese New Year. No surprise then that for the first time in a long while, forward capacity for next week and beyond is actually below this week’s level and that is before network planners’ factor in the next planned series of lockdowns. Oh, happy days!
Scheduled airlines around the globe are currently offering a range of eye-watering fares in the hope of jabbing the market back into recovery mode although sentiment seems to be towards no real recovery before the second half of the year in demand. The whole industry appears to be holding its breath for good news and the reopening of borders and international travel.
Chart 1 – Scheduled Airline Capacity by Week Compared to Schedules Filed on 20th January 2020 & Previous Year
Four of the five largest regional markets are reporting capacity reductions week on week. North America where with nearly 10% of all capacity has been shaved off and 1.4 million seats dropped compared to last week. North East Asia reflects a similar pattern with a million fewer seats operating although the region remains at close to 75% of the capacity operated in the same week last year.
Eastern Europe is also apparently growing again, with regional week on week growth of 7% and some 141,000 more scheduled seats. I say apparently because much of that growth is from Romania with Wizzair, Blue Air and Tarom all increasing services; quite how many of those will be canceled at less than seven days’ notice will be interesting to watch.
Table 1– Scheduled Airline Capacity by Region
China was the largest aviation market in the world in 2020 and continues to hold it’s position as we head in to 2021 with little risk of any change before international lockdowns are eased to and from the United States. The remarkable transition from an international to domestic focus in Chinese capacity cannot be ignored; in January 2020 there were typically some 2.1 million international seats; this week just 153,000. At the same time domestic capacity has remained around the 14.7 million seats a week. Until that international capacity returns many surrounding country markets remain frustrated in their attempts to recover; China literally holds the key for many surrounding markets.
Table 2- Scheduled Capacity, Top 20 Countries Markets
The first week of 2021 was never going to be significantly better than the last week of December, but the indications are that we are once again becalmed around the sixty million mark waiting for some vaccine breakthrough moment. For airlines and airports, it’s a bi-polar moment; fearful of what the next three months will bring but equally optimistic about the second half of the year. Now if we could just close our eyes for perhaps two months then things may start to look a lot better; but getting there will be a challenge for many; just as well this industry loves a challenge!